Lost in Transit

With the recent revelation that the Department of Defense cannot locate more than 50,000 containers, concerns about the government’s ability to equip soldiers on the battlefield prompted Senators Daniel Akaka (D-HI) and George Voinovich (R-OH) to call the fourth senate hearing on DoD supply-chain management since 2005. Many of the containers lost in transit are owned privately, and have simply disappeared. When asked if the containers were empty or full when they were lost, or if they made it to their destination, General Schwartz, Commander of the U.S. Transportation Command, replied “Some of all of the above.” When asked if the container management problem had been solved, Government Accountability Office (GAO) Defense Capabilities and Management Director, Bill Solis, responded that results remain to be seen.

DoD supply-chain management has been on the GAO’s “high-risk” list since 1990, because of “systemic supply problems . . .including inaccurate supply forecasts, poor asset visibility, and ineffective distribution.” Ongoing inaccuracies and unreliable supply-chain management clearly put national security at risk, because they hinder our ability to quickly and accurately combat hostile forces, a skill that has been pivotal in maintaining America’s worldwide military dominance since the 20th century. These problems also call into question America’s ability to equip its warfighters. According to the GAO July report, 44% of DoD shipments arrive 90+ days after or before they are scheduled. This forces army commanders to factor in a minimum of 180 days leeway time for new equipment, and has led to duplicate orders, overestimates of supplies needed, and profligate waste.

The chronic overstocking at Air Force facilities epitomizes the pack rat mentality created by this lack of asset visibility and unreliable materiel distribution. According to the GAO, the Air Force wastes between $15 million and $30 million each year to store nonessential supplies. In fact, GAO classified 65% of the Air Force inventory as unnecessary to meet required inventory levels,” encompassing more than $18.7 billion dollars in extraneous assets. Senator Voinovich estimated that the Department of Defense wastes about 10% of its annual $400 billion budget on “redundant or outdated business practices.”

Storage isn’t the only extra charge incurred by supply chain mismanagement. Buyout and detention charges for unreturned shipping containers has cost the DoD $203 million, and the department must now store or sell off the additional 25,000 containers. This raises the total number of DoD-owned containers to 110,000, with another 30,000 leased containers, and 4,400 carrier-owned containers still under detention. General Schwartz maintained that the DOD was considering retaining some of the bought-out containers in order to prevent another shortage like the one in Afghanistan, and leasing the remainder so that they are on call in times of deployment.

Unlike the more than 50,000 untraceable containers, the military deliberately detained the 25,000 bought-out containers during the Iraq and Afghanistan wars. Because the units had refrigeration capability, the military innovatively converted them into food storage areas in the middle of the desert. According to General Schwartz, other containers were converted for storage, housing, and force protection.

Both Senators Akaka and Voinovich commended the department’s “significant progress” in overcoming its supply-chain management challenges. This contrasts with the GAO July report, which describes the challenges still facing DoD supply-chain management as “formidable.” The GAO denied the DoD’s 2007 request to be taken off the high-risk list, because it felt that DoD supply-chain management had not demonstrated significant results. They remained concerned about three areas: forecasting, asset visibility, and materiel distribution. All parties present at the hearing seemed to agree that a new administration would jeopardize the progress the DoD has made, if these contemporary procedures were not institutionalized before January 2009.

The DoD has made some progress toward increasing asset visibility through the addition of radio-frequency identification technology (RFID). However, the DoD’s attempts to upgrade to a newer system brings with it the difficult choice between cost-effectiveness and higher quality technology. The DoD must decide whether to purchase cheaper, 65-cents RFID tags, or more sophisticated $65 RFID tags which contain a larger memory storage to record container contents, point of origin, and destination right on the shipment. At present, cheaper tags are not quite working for DoD supply chain management. The GAO’s July 2007 report notes that a combination of torn and missing tags, inaccurate information, and badly executed management processes has hindered the effectiveness of this new technology. DoD officials noted, however, that even successful private companies such as Walmart have recently had to revise their RFID tracking systems because of unforeseen complexities with passive RFID tracking. In defense of the DoD’s current circumstances, General Schwartz asserted that the DoD faces unique challenges; Walmart stores don’t move, but the military does.

According to GAO testimony, DoD supply chain management staff spent half of their time using “manual workarounds” such as “pulling data from information systems, e-mailing. . . for validation or coordination,” compiling data on spreadsheets, and “analyzing it to make management decisions.” If the interoperability problems at DoD operations were simply fixed, these manual workarounds would be unnecessary. It also calls into question the ability of DoD supply-chain management to adapt to and fully utilize the new RFID technology. Nevertheless preliminary tests have yielded positive results; DoD officials assert that the addition of passive RFID tags to “large consolidated DoD shipments… to Iraq and Afghanistan” has already provided an “unprecedented level of asset visibility,” with 83,000 position reports generated each week. In addition, department officials report that the Navy’s Trident Refit Facility in Bangor, Washington achieved a “two-thirds reduction in receipt to stow processing time” following the application of RFID technology.

Bethany Stotts is an intern at the American Journalism Center, a training program run by Accuracy in Media and Accuracy in Academia.

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